A personal installment loan lets you borrow a fixed sum of money and repay the balance over time. Most installment loans have a fixed-interest rate, which means you’ll pay the same amount each month, until the loan is repaid. Personal loans, auto loans, debt consolidation loans and even “buy now, pay later” loans are all types of installment loans.
We’ve evaluated major installment loan providers and highlighted the best options below. We’ll update this list regularly as terms change and new loan products are released.
Note: All the starting annual percentage rates, or APRs, here are based on a borrower having an excellent credit score of 800 or above. If your credit score is lower than that, you may be approved at a higher rate. The APRs listed are current as of January 9, 2023.
- APR: 6.99% to 23.24%
- Loan amount: $3,000 to $100,000
- Loan terms: 12 to 84 months
- Time to receive funds: As soon as 1 business day
- Prequalification: Yes
- Origination fee: None
If you need a large stream of capital for any purpose, this big national lender might be the best choice for you. Wells Fargo offers an array of interest rates across a range of credit scores, as well as flexible repayment terms and loan amounts. If you have a Wells Fargo checking account, you can get a 0.25% interest discount. However, be aware that Wells Fargo is known to charge significant late fees, as well as non-sufficient fund fees if you don’t have enough in your bank account to cover a payment.
- APR: 7.99% to 23.43%
- Loan amount: $5,000 to $100,00
- Loan terms: 24 to 84 months
- Time to receive funds: As soon as same day (terms apply)
- Prequalification: Yes
- Origination fee: None
Social Financing, or SoFi, offers competitive rates on debt consolidation loans, which allow you to combine multiple forms of high-interest debt, such as credit cards, into a more manageable fixed-rate loan. It has low interest rates and does not charge processing, prepayment or late fees. SoFi also offers autopay discounts and offers free financial advising. Its unemployment protection service is a notable feature, allowing you to lower your payments for up to 12 months if you lose your job.
You’ll need decent credit to get approved with SoFi -- its minimum credit score requirement is 680. SoFi also does not offer loans in Hawaii or New York.
- APR: For Consumers Credit Union members, rates start at 5.24% (for 2021 or newer vehicles), 5.49% (for 2017-20 vehicles) and 6.54% for 2016 and below
- Loan amounts: $250 to $100,000
- Loan terms: 0 to 84 months
- Time to receive funds: Not specified
- Prequalification: Not specified
- Origination fee: Not specified
Though this credit union is based in Illinois, membership is available nationwide. Consumers Credit Union offers a wide range of loan amounts and terms, as well as great rates for new car loans. In order to become a member, you need to provide a valid ID, two recent pay stubs, two recent tax returns, two utility bills and five references, and pay a $5 fee.
- APR: Through the PenFed Car Buying Service, rates start at 4.59% (new car loans), 5.54% (used car loans)
- Loan amounts: $500 to $150,000
- Loan terms: 36 to 84 months
- Time to receive funds: Not specified
- Prequalification: Not specified
- Origination fee: Not specified
Pentagon Federal Credit Union is a great option if you want to buy a new car -- and isn’t too shabby for used car loans either. Offering the lowest rates for members, this credit union offers low rates for new and used cars respectively when purchased through the PenFed Car Buying Service. Membership is open to anyone who opens a PenFed saving account with a minimum $5 deposit.
- APR: No interest for Split Pay; 0% to 30% for biweekly and monthly payment options
- Loan amounts: Up to $17,500, maximum decided by credit score, payment history and ability to pay
- Loan terms: 6 weeks to 60 months
- Time to receive funds: As soon as 1 business day
- Prequalification: Yes
- Origination fee: None
Buy now, pay later apps are micro-installment loans that you can use to purchase goods or services now and pay them back over time. A standout among BNPL apps, Affirm offers a variety of payment options ranging from the standard six-to-eight week installment plans to 60-month installments. Affirm also offers instant prequalification, a high purchase limit of $17,500 and virtual and physical cards that enable you to shop at anywhere that accepts Visa.
Affirm’s payment plans include a Split Pay option, which divides your total cost into four interest-free installments, paid every two weeks, with the first payment due at the time of checkout. If needed, you can stretch the repayment timeline to eight weeks, eliminating an upfront payment.
What’s unique is that this BNPL service also offers flexible biweekly and monthly payment plans, ranging from six weeks to 60 months. Keep in mind, however, that these longer plans could come along with interest rates, depending on your credit score and previous BNPL repayment history. (Affirm charges up to 30% in interest, one of the highest interest rates available for BNPL services.) It’s worth noting that BNPL apps charge simple interest, meaning that interest will only accumulate on the loan itself, not on any interest that accrues -- unlike credit cards, which charge compound interest. Affirm is upfront about its interest rates once you apply for loan approval, and you’ll be able to see your rate and how much interest you’ll pay.
How do installment loans work?
Installment loans give you a lump sum of money, usually with a fixed interest rate, that you repay in fixed monthly payments, or installments. Most installment loans have terms ranging from several months to several years..
How to choose the best lender for an installment loan
Installment loan lenders may offer many of the same types of loans and benefits. To find the right installment loan provider for you, shop different lenders and compare annual percentage rates, fees, loan terms, security and other benefits.
APR
The annual percentage rate, or APR, is the total amount of interest and additional fees a lender charges you in exchange for borrowing money. The lower your APR, the less you’ll pay in total interest over the life of your loan. Compare APR offers across lenders to find which company will offer you the lowest rate. (Note: Your interest rate and APR are different. Your APR is often higher than your interest rate, since it contains your interest rate plus other fees.)
Fees
Charging fees are a major way for lenders to make money (in addition to charging interest on a loan). While some fees are rolled into your APR, some lenders charge additional fees, like origination fees or processing fees, that are rolled into your loan’s balance.Look for lenders with no or few fees, lenders that charge the lowest fee amounts or companies with more lenient fee structures. For example, some lenders don’t charge late fees or give you a grace period to make a payment before a late fee is charged.
Variation in repayment terms
Lenders offer different repayment terms -- the amount of time you have to fully pay off your loan -- for installment loans. A shorter loan term can help you save money on interest overall, but may require higher monthly payments. A longer loan term can help lower your monthly payments, but may result in paying more interest over the lifetime of a loan. Find a lender that offers flexible loan terms to fit your needs.
Lender security
Keeping your financial and personal information safe is critical, especially when applying for a loan online. The best lenders use encryption to keep your information safe. When exploring lenders, check to see if they’ve had recent data breaches, and research how they protect your personal and financial information. If you don’t feel like your lender keeps your information safe and secure, you might not want to do business with them.
Additional lender benefits
Many lenders have competing interest rates, fees and repayment terms. But some lenders offer other extra features that can help reduce your monthly costs or provide credit boosting benefits.
For example, a lender may offer a discount -- usually a percentage off of your rate -- when you enroll in autopay and have payments automatically deducted from your bank account each month. Some lenders also offer a co-signer release option, which lets you remove a co-signer from your account after you’ve made a set number of on-time monthly payments. Another benefit a lender might offer is approving you for a loan without a co-signer, even if you have a lower credit score.
Types of personal installment loans
Most installment loans have a fixed-interest rate, which means your interest rate will never change and you’ll make a set payment each month. Here are a few different types of individual installment loans you can apply for, depending on your needs:
Personal loans
A personal loan is money borrowed from a bank or financial lender that you can use to consolidate debt, finance a home improvement project or gain access to a stream of capital. You can use a personal loan for many purposes, but lenders may restrict you from using your funds to pay off student debt or higher education costs with this type of loan. Personal loans are often a more affordable alternative to credit cards, with generally lower interest rates and more flexible repayment terms.
Check out CNET’s picks for best personal loans.
Debt consolidation loans
If you have high-interest credit card debt, past-due medical bills or another type of personal debt, a debt consolidation loan lets you combine several credit accounts into one new personal loan. Consolidating multiple monthly accounts into one fixed payment can make your debt easier to manage -- and you may be able to lock in a lower interest rate than you currently pay.
Check out CNET’s picks for best debt consolidation loans.
Car loans
Auto loans can help you buy an old or new vehicle. Unlike most personal and debt consolidation loans, an auto loan is a secured loan, which means your vehicle is used as the loan’s collateral. So, if you fail to make the necessary payments and your loan defaults, or falls into bad standing, the lender can take your vehicle to compensate for its loss.
Check out CNET’s picks for best car loans.
Buy now, pay later plans
This popular alternative to credit cards lets you buy products or services now and repay the balance over a set period of time. Many BNPL apps offer payment plans that span six or eight weeks and are interest-free, though many charge late fees.
BNPL apps may also offer payment plans that span months or years. These longer installment plans usually charge interest.
Check out CNET’s picks for best buy now, pay later apps.
Other types of installment loans
There are many other types of installment loans, including a student loan and a mortgage, or home loan. Student loans can have fixed or variable-interest rates and may be financed by the federal government or a private lender. A mortgage, or home loan, can also have a fixed or variable interest rate, and is secured by the house you are purchasing.
Pros
Set monthly payments. Most installment loans have fixed interest rates, which means you’ll always know how much you’ll pay each month.
Ability to refinance. If you find a lower rate down the line, you can reduce your APR by refinancing into a new, lower-rate installment loan.
Boosts your credit score. Over time, making on-time payments can help improve your credit score.
Cons
Higher APRs, in some cases. Unless you have good to excellent credit, an installment loan may be more expensive than a home equity loan, home equity line of credit or 0% introductory APR credit card.
Can hurt your credit score. Although making on time payments can boost your credit in the long run, taking on a large loan amount can cause your credit score to dip in the short-term. In addition, if you miss payments or stop paying on your loan, your credit score will drop.
May require collateral. Secured installment loans, like an auto loan, require an asset to serve as collateral. While the car you’re buying helps secure your loan, this also means it can be repossessed if you miss payments or default on your loan.
How to get the best rates
The best interest rates are reserved for borrowers with high credit scores and clean credit histories. Sometimes, the best interest rate you find from one lender might not be the lowest interest rate that’s available to you. It’s important to compare interest rates across different lenders before applying for an installment loan.
How to qualify and apply for an installment loan
1. Review your finances. Figure out how much money you need to borrow and determine how much you can afford to pay toward a loan each month. You can use an APR calculator to see how different loan APRs and terms could lower or raise your monthly payment.
2. Check your credit score. Before applying for an installment loan, check your credit report to make sure it’s free of errors, which can lower your credit score. You should dispute any errors and have them removed from your credit report before applying for a loan. If your score is lower than a lender requires, you may want to work on your credit before applying for a loan.
3. Get prequalified. You can typically view lender rates by getting prequalified by a lender. You’ll share some financial and personal information -- like your legal name, income and credit score -- so you can view current loan terms and interest rates. Prequalification doesn’t impact your credit score, and it also does not guarantee approval at the rates you view.
4. Compare lender offers. Next, review loan rates and terms across multiple lenders to find the lender with the lowest rate, best loan term and the fewest fees.
5. Apply for the loan. Once you’ve decided on a lender, it’s time to apply for your installment loan. You may need to provide financial documents like paystubs, bank account statements or tax returns during this step. The lender will then run a hard inquiry on your credit profile, which may temporarily lower your credit score.
FAQs
While a high credit score can improve your chances of getting approved for an installment loan, it’s possible to get a loan with a lower credit score. You should expect to pay a higher interest rate and potentially extra fees, like an origination fee, to process your loan.
Check out CNET’s picks for best loans for bad credit.
Whenever you apply for a loan, lenders will run a hard credit check, which could temporarily cause your credit score to drop. However, making on-time payments can help boost your credit score over time.
Note: Not all BNPL micro-installment loans require a hard credit check. BNPL plans also do not typically report your payments to credit bureaus -- so your credit score is generally not impacted.
Most personal installment loans, debt consolidation loans and student loans are unsecured, which means you do not need to provide collateral to get approved. A secured loan requires collateral for approval. Auto loans and mortgages are two common examples of secured loans, where the vehicle or home you’re buying serves as collateral for your loan.
Almost all types of installment loans require a soft or hard credit check, except for federal student loans. Federal student loans do not require a credit check and the ones that do -- PLUS loans for graduate school or for parents of undergraduates -- have a low threshold for qualification. Interest rates for federal student loans are set each year based on loan type and are the same for all borrowers, regardless of your credit score.
Be wary of any lender offering to approve you for an installment loan without a credit check. These lenders are often predatory and offer a product called a payday loan that often comes with astronomical fees and repayment terms.
Payday loans are predatory loans with steep APRs averaging 400% and short repayment terms -- full payment and interest are typically due back in a couple or weeks, or by your next payday. If you can’t repay the loan in full, you’ll typically receive even higher penalty fees.
While a payday loan is structured like an installment loan, there are some significant differences. First, installment loans typically give you more time to repay your loan, even if you borrowed a few hundred dollars. Installment loans also have much lower interest rates than payday loans -- even if you have a low credit score, installment loan APRs typically are not higher than 36%. Payday loan APRs can be even higher.
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